3D finite element analysis were carried out to study the deformation behavior in particle reinforced metal matrix composite systems. The deformation constraints was investigated in a transversly alligned model and the development of triaxial stresses were studied. It was determined that the strengthening behavior arises due to geometrical hardening in the early stage of composite deformation. Special deformation stages in the overall stress - strain behavior of the composite microstructures such as initiation of microyielding. expansion of plastically deformed region and spread of plastic flow were determined by following the plastic flow events.